The Future is Mobile: Digital Banking in Latin America

Leonardo Gonzalez Dellan, former President of Banco Industrial de Venezuela (BIV), predicts massive growth in digital banking on hand held devices: “The future of banking is now becoming clearer by the month. Like Africa, Latin American is set to leap frog Europe in the take up of mobile banking technology. This trend is vital if the economic downturn now widely predicted is to be avoided.”

E Commerce is the driver of this mobile banking revolution. In Argentina and Brazil, the combined revenue in the “eCommerce” market is projected to be US$25,344m in 2018. The sector is expected to show an annual growth rate of 10.8% resulting in a market volume of US$38,242m in 2022. At the moment the market’s largest segment is “Fashion” with a market volume of US$8,606m in 2018. At present e-commerce is accessing an estimated 35.4% of the populations of these countries in 2018 and is expected to hit 46.1% in 2022. The average revenue per user (ARPU) currently amounts to US$279.63. But Argentina and Brazil are at the top end of the digital pyramid. Of the 24 countries analyzed in the State of Broadband report in 2016, three had household Internet penetration that was below 15%; fifteen were between 15% and 45%; another three were between 45% and 56%; and only Chile, Costa Rica and Uruguay reached 60%. It is this capacity for growth coupled with the leap frogging of broadband by mobile services that is the key. Mobile technology allows for quick steps forward in the adoption of new platforms and forms of digital payments. Mobile access to broadband connections increased from 7% to 58% of the population between 2010 and 2015 across Latin America. From 2010 to 2015, the number of mobile subscribers grew 802.5% while that of fixed connections rose 68.9%. The country with the greatest penetration of mobile broadband vis-à-vis the overall population is Costa Rica, at 95.5%.

“Any banks that do not embrace this mobile technology will be left behind and any country that does not embrace mobile access to broadband will suffer economically in what promises to be very challenging years ahead,” says Gonzalez Dellan.